The biggest four banks hold only about a third of Americans’ deposits. Digitisation will help these titans get even bigger
measure, America’s biggest banks are behemoths. JPMorgan Chase’s balance-sheet weighs in at $2.7trn, Bank of America’s at $2.4trn. Citigroup tips the scales at almost $2trn and Wells Fargo at $1.9trn. Their combined market value is nearly $1trn. Last year they raked in over $100bn after tax.
Digital technology is already reshaping the landscape. After 147 years of disdain for retail banking, in 2016 Goldman Sachs launched Marcus, a consumer bank. It has snared $35bn of deposits, helped by a posh brand and generous interest rates. “Our advantage is that we are unencumbered by legacy systems,” says Harit Talwar, Goldman’s global head of consumer business. Goldman built its platform in 11 months.and ever-emptier branches, will suffer the fate of retailers and taxi drivers.
More surprisingly, most big banks still see branches as assets. Yes, they are closing lots. But to grow, they need to spread. The biggest cannot simply buy their way into new markets, because takeovers that create banks with more than 10% of all deposits are barred. So in the past few yearshas also set up shop in Denver, Indianapolis and Minneapolis; Ohio’s big cities are next. JPMorgan Chase said in 2018 it would enter 20 markets and open 400 branches.
By contrast Citi, whose branches are concentrated in half a dozen cities, sees little need to open many more. A vast fee-freenetwork and its huge credit-card business, which offers both own-branded cards and co-branded ones for American Airlines, Costco and others, mean it already has a mighty digital presence, says Stephen Bird, its global head of consumer banking. Citi hopes to persuade credit-card customers to open current and savings accounts, using extra card rewards as a lure.
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